Your Week in Metro Detroit: Mortgage rates slightly cool Detroit's housing market

JC Reindl, Detroit Free Press
·2 min read

Good morning, Free Press subscribers.

I’m reporter JC Reindl, and part of my beat is the metro Detroit housing market.

Last year, the big news was soaring home prices, ultra-low mortgage rates and the seemingly endless frustrations of those looking to buy a house, only to get outbid again and again.

There has since been a shift in market, prompted by rising mortgage rates.

Today many sellers are still seeing multiple offers, and can sometimes get above their asking price. But prices overall are finally leveling off, and some buyers are successfully negotiating modest price reductions, perhaps 5% or so.

The rise in mortgage rates from under 3% to the mid-5s translates into over $300 more in monthly mortgage payments on a $250,000 house, including taxes and insurance.

These higher costs are forcing some buyers to look at less expensive properties, or even put their house hunt on hold as they wait — and hope — for home prices to fall further.

My recent story highlights the experience of a couple in their 30s who last month sold their three-bedroom ranch house in Dearborn Heights for $670,000, after having bought the property for $490,000 in August 2020. Their interest rate on the mortgage was about 3%.

The couple have since downsized to a three-bedroom condo in Livonia. They were one of about six bidders on the condo, which they closed on for $280,000, or $20,000 above the asking price.

Real estate agents agree that the underlying problem in the housing market here as well as nationwide is a shortage of inventory. In Michigan, we never returned to the level of homebuilding activity that we had before the Great Recession.

Now there is a shortage of housing, and that’s propping up prices because demand remains strong yet supply is limited. That fundamental mismatch is why many observers of the local market didn’t see any housing bubble last year, back when mortgage rates were historically low and demand was off-the-charts.

Thank you again for subscribing. You can reach me jcreindl@freepress.com and 313-378-5460.

JC Reindl

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This article originally appeared on Detroit Free Press: Mortgage rates slightly cool metro Detroit's housing market